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Friday, December 04, 2009

One Way to Teach Children (Even Very Young Ones) About Saving and Spending
By 
James W. Stone

I want to introduce you to Lisa Dworkin, President of Money Masters Foundation. (If you need an ally in getting a Financial Literacy curriculum at your middle school, high school, or even for your home-school program, Money Masters Foundation can help.  They are a 501(c)(3) nonprofit organization dedicated to teaching financial literacy skills to teenagers.)  Lisa has designed curricula for teaching Financial Literacy.  And she writes her own blog on the Money Masters Foundation web site.

Lisa's viewpoint on financial matters is very much like mine, but her perspective is looking at what we can do to assure when today's children grow to adulthood, they will know what money is, and how to handle it.

Some of Ms. Dworkin's articles are worth repeating here on this site.  They also offer a slightly different flavor for our readers.  With that introduction, let me present one of her articles here.

One Way to Teach Children (Even Very Young Ones) About Saving and Spending
by Lisa Dworkin

Have you ever been in a store with your child when s/he had a complete meltdown because you refused to buy something s/he saw and wanted? I know I have. Although, thankfully it’s been a number of years, since my children are now 17 and 19. What do you do in that completely mortifying situation when everyone is looking at you and judging your parenting skills? Do you give in to quiet your child so you can finish your shopping? Do you say "no" and continue shopping with a screaming child? Or, do you leave the store to avoid the shame without completing what you went there for in the first place? Personally, I was guilty of all three approaches at one time or another until I figured out a better way.

Let me tell you about a technique that not only makes running errands with your child easier, it teaches even very young children essential lifelong finance skills. Before going shopping with your child determine a reasonable amount of money to give him or her. You want the amount to be small enough that you don’t care how it is spent, but large enough that it can be used to purchase something. When you are in a store and your child sees something s/he wants, state that s/he can buy it with his or her own money if it is within the dollar amount you have set aside, or s/he can save the money for the purchase until s/he has enough to buy the item. If your child does decide to save the money make sure you reward that choice by continuing to give the same amount of money each time you run errands with him or her so the desired item is eventually affordable.

Keep in mind that when young children want things in stores they genuinely want it at that moment, but what they really want more than the item itself is some control (this is also true for many older children and adults). For that reason, it is best if parents let children make their own spending choices even if they are choosing to buy something you would never agree to buy. The only exception should be if the item your child wants to purchase poses a danger. That’s why you set spending limits by determining the amount of money to give your child.

The good financial habits taught using this technique include learning …
  1. The value of coins and bills.
  2. How to count money.
  3. The benefit of saving.
  4. To make choices about spending.
  5. The difference between using one’s own money versus using other people’s money.
Not only does this teach children good financial habits, it makes running errands easier on you, the parent. It also works with children as young as three.

Lisa Dworkin
Copyright 2009, Lisa Dworkin, all rights reserved worldwide

You can find information about Money Masters Foundation at www.money-masters.org.
You can find more of Ms. Dworkin's articles at  moneymastersfoundation.wordpress.com



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